The inevitable disclosure doctrine and CEO risk-taking incentives

Jingyu Yang and John Z. Zhang

Asia-Pacific Journal of Accounting & Economics, 2023, vol. 30, issue 1, 120-138

Abstract: This study investigates the impact of the inevitable disclosure doctrine (IDD) on risk-taking incentives of chief executive officers (CEOs). Because the IDD restricts CEOs’ external employment opportunities, we expect CEOs to become more risk-averse and firms to increase CEO risk-taking incentives after IDD adoption. Consistent with expectations, we find that IDD adoption is associated with higher CEO risk-taking incentives, measured by the sensitivity of CEOs’ equity holdings to stock return volatility (Vega). The positive impact of IDD adoption on CEO risk-taking incentives is stronger for firms in more homogeneous industries and for CEOs in the later years of their tenure.

Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/16081625.2020.1871041 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:raaexx:v:30:y:2023:i:1:p:120-138

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/raae20

DOI: 10.1080/16081625.2020.1871041

Access Statistics for this article

Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

More articles in Asia-Pacific Journal of Accounting & Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().